CRM in 2010: The experts' views

The economic climate has continued to be a decisive factor for global business. Economically, 2010 has been characterised by the transition from recession to recovery – though organisations have been all too aware that any recovery is extremely fragile.

"Businesses were typically looking at customer retention strategies rather than acquisition strategies, though we are now moving back to acquisition as the recession is pretty much over," says Paul Greenberg, author of the seminal CRM at the Speed of Light and president of The 56 Group. "In a recession, people tend to spend less, so businesses wanted them to spend more of what they would have otherwise spent with them. Did it aid the end of the recession? As much as anything else did, sure. It was one of the factors that when successful the companies were getting customers to spend more money and was definitely pumping the dollars into the economy. It wasn’t a primary reason for the end of the recession but it was an important additive."

Viewed as a useful tool to aid customer retention during the recession, CRM technology has continued to receive strong investment, despite the economic conditions, with a survey of European business and IT professionals, demonstrating that as a result the CRM industry has weathered the credit crunch better than most other enterprise software applications.

"This recession has been more akin to a slowdown, and it has forced companies to focus more rather than to completely stop doing things," says Larry Augustin, CEO of SugarCRM. "When they focus and really aim to invest in what is important, things like CRM do well. Right now we’re at the point where companies need to stay frugal and focused and that means that CRM investments are useful and make sense – so I’d argue that this slowdown has actually favoured CRM."

But CRM investment hasn’t only been driven by those with customer retention in mind. While many businesses have cut costs and looked to retention, there have been others – such as low cost retailers – that have viewed the economic conditions as an opportunity for growth.

"Those that have had really strong CRM capabilities, technology, people, processes and so on, have been able to align those capabilities to support the corporate strategy," says Laurence Buchanan, head of CRM and social CRM at Capgemini UK. "For those that have had a strategy around cutting their costs and retaining their customers, having a powerful CRM system in place has enabled them to obtain a single customer view, identify the most profitable customers, put in place retention programmes to retain those customers, focus on things like loyalty and analytics, supporting the reasons why customers are churning. Whereas those that have had this growth focus, have had an entirely different use of CRM - for them it has been about how they can get new products and propositions to market quickly, and how they can really focus their sales teams on new customer acquisition."

But the economy hasn’t been the only threat/opportunity (depending on your view) that businesses have had to contend with in 2010. This has also been the year that organisations have acknowledged that the social web – and its impact on the modern customer - cannot simply be ignored.

The dawn of the Web 2.0 "communication revolution" predated the recession, but the customer expectations that accompanied it – more real-time response, greater empowerment, greater involvement in business decisions, etc – have become more apparent to organisations. "It is tougher on businesses, because customers expect every bit as much as they did before the recession started in terms of how they are going to interact with the company and at the same time are more reluctant to spend money," suggests Greenberg.

But the social web also represented a new channel for engagement – and widespread acknowledgement of this led to a rush to social platforms. "We are just about at the stage now where you can’t ignore it because customers are talking about your brand whether you like it or not," says Buchanan. "You can’t control what they’re saying and you can’t control whether they are talking about you or not."

But for the many that made the move into social media, there was a steep learning curve ahead.

"Typically the problem they have had is that they don’t understand that because they are engaging in a different place than they’re used to, that they have to function differently," explains Greenberg. "They may involve themselves in Twitter, for instance, but they keep it impersonal, which is a common mistake. Or they use it as a new form of email blast that they hope will get retweeted.

"The other mistake is a lack of cultural change, when it should be going on en masse. They may utilise some of these social channels to do things, they don’t make any attempt to accept the fact that the customer is in command of the conversation. And that is wildly problematic because if you don’t deal with it you are going to attempt to impose on the customer’s environment. It is like coming into a restaurant, overhearing a conversation about yourself and just deciding that you are going to sit down at that table because you want to. That doesn’t work. You have to actually figure out other ways to take care of those issues."

Buchanan adds: "Another common mistake is that they view social media in isolation from the rest of the customer experience. So all these people that at the moment can listen and respond to Twitter, but it is not connected into the CRM system. They can’t start a process on one channel then transfer over to another, it is not recorded against your customer master record, it is a very siloed disjointed approach."

Few – if any! – may have achieved this goal of a holistic social business, but that hasn’t stopped organisations aspiring to it. “2010 has been the year of ‘social CRM’ as a buzzword – you can’t mention CRM this year without mentioning social CRM,” Buchanan continues.

"In some respects that has been a bad thing because people have just focused on the social media elements of social CRM. But in some ways it has been a good thing because actually it has brought CRM back into fashion and there is this growing realisation that the majority of social CRM is actually CRM – it is entirely reliant on having a core foundation of CRM."

A buzzword it may have been in 2010, but social CRM also received validation this year, according to Greenberg. "That comes in a combination of things – my book coming out, the use cases from Altimeter,  Gartner’s Social CRM Magic Quadrant coming out, and also Gartner’s projection that there is going to be a billion dollar submarket in social CRM services and applications. So the market has been validated – that doesn’t mean it has been executed, but it has been validated."

Organisations also increasingly factored the mobile channel into their plans during 2010, with innovators looking beyond the mobile as another push marketing opportunity to discover genuine opportunities for customer engagement. IKEA, for instance, has a virtual catalogue app where you can select a piece of furniture from the catalogue and place it anywhere inside the room around you.

"The key for apps is to answer a customer need – like the IKEA one does. You can see the value of that to the customer," says Mark Blayney Stuart, head of research at The Chartered Institute of Marketing. "So the key with mobile technology is to find out what a customer need is and build something based on that. Guinness, for example, has a pub finder app and you hold it up and it shows you which pubs in front of you serve Guinness. And of course the customer need that it answers is ‘I don’t want to waste my time walking into pubs and asking for a pint of Guinness and finding out they don’t sell it’. So customers will like that because it serves a need. And that’s an example of marketing that doesn’t seem like marketing – getting them to want to receive your marketing instead of just another advert that they will probably ignore because they see so many messages."

Mobile CRM has also shown strong growth throughout the year. "The interest in mobile CRM is enormous and from the technology side you see company after company starting to create REST APIs so that they can do mobile CRM applications," says Greenberg. "We have also seen companies like SAP buy Sybase for $5.9bn, of which about $400m was the iAnywhere platform which was a very important piece of SAP strategy, a mobile strategy. The companies are all recognising the mobile is the wave of the future because we are all working off our iPhones, iPads and Androids at this point."

"Mobile has become a big thread and we see that more and more with the connectivity of systems that is appearing in mobile devices for CRM," adds Augustin. "The demand for native mobile applications is amazing. It is very interesting – we supported the mobile web browsers for a long time and the user experience is pretty good but not quite the same as a native web application and people have really embraced the idea that that for a mobile device you need a native mobile application."

Following a year when customer service training budgets were slashed, 2010 saw companies start to get serious about service once more. Describing the present climate as "a renaissance in customer service", the Institute of Customer Service’s CEO Jo Causon points to stats showing growing customer satisfaction to demonstrate development in the discipline.

"It’s not the old style customer service that we saw in the 80s – 'have a nice day' – it is far more about how to integrate your service across an organisation," she suggests. "This is not done well in all organisations, but those that are leading the way are really understanding that customer service is about aligning your people, your processes and your strategy. I’m starting to see more evidence of it becoming more important in the boardroom as well, there is more of a discussion in the boardroom about how we focus on more of a customer-centric strategy rather than it being a bolt-on or just about the delivery aspect. And we have seen some real movement in that in the last 12 months."

Greenberg is in agreement. "This year customer service became the pre-eminent pillar of CRM, both as a driver of the social thing on one hand, but also by becoming essentially a wrapper around all of the CRM and social CRM initiatives, and thinking and department."

He continues: "What is happening is that even sales reps are becoming customer service reps now, meaning they have to be empowered to take care of actions that customers are demanding. This is because, for example, we’re seeing customers saying – particular in the B2B world – ‘this is the guy who sold it to me, I’m not going to call customer service, I’m going to talk to him about my problem’. So the service experience has become predominant."

With customer service a priority once more it will be no surprise to hear that the customer experience was back on agenda again in 2010. And according to Shaun Smith, founder of Smith+co customer experience strategies played a critical role in business performance during the challenging competitive environment of the past year.

"They have helped in two main ways," he explains. "The first is by providing a viable strategy for continuing to grow business and defend without having to resort to cost-cutting. At its worst, the luxury retail sector declined by 30%. But earlier this month Burberry declared its half year results with a 50% improvement – it has stormed out of the recession on the back of improved sales. And when CEO Angela Ahrendtstalked about this recently on a YouTube video, one of the first things she mentioned was how it had put emphasis on its retail strategy and the Burberry experience. And that has really all been about creating a differentiated experience for Burberry when many of their competitors have been laying off staff and cost-cutting.

"There has been a renewal of both interest and knowledge that customer experience still remains at the core of everything that is being done," agrees Greenberg. "I’m finding that a lot of the vendors are beginning to adopt customer experience as their core messaging too because they are understanding that what customers are looking for is a feeling about the inter-relationship between the company and them. And that is where the customer experience comes in. That is becoming a predominant foundational message that a lot of companies are returning to. And I say returning to because it was always the fundamental message of CRM!"

As well as the larger trend of customer experience returning to the agenda, Smith has also noticed a couple of trends within this space that have emerged this year.

"Businesses have started taking a much more holistic view of customer experience – looking at it cross channels, across touchpoints, across media, with a much more joined up view of it. Firms are also looking at it in terms of the emotional connection with the brand as well as the functional. So we know from IBM Ogilvy research that brands that create an emotional as well as functional connection have much higher levels of retention and cross sell. If you go back a couple of years, experience was seen perhaps more for transactional process but what people are realising is that you have really got to get the emotional part of it right. And that in turn leads to the other main trend which is the growth in interest in employee engagement and employer branding and the whole issue around the employee experience. People are seeing that the employee experience is a mirror for the customer experience, and you need to pay attention to both and both need to be joined up and framed around a common set of values."

So 2010 has brought us an interwoven blend of trends – brands starting from scratch in the social media world, learning about engagement on the mobile channel, and putting emphasis back onto customer service and customer experience. But there is one area of focus that has been most fundamental of all to success in 2010 – and indeed any year.

"What the recession has shown clearly is that customers are the lifeblood of any business – in both good times and bad," concludes Buchanan. "Perhaps your focus shifts very slightly in good and bad economic times, but one thing that really becomes more and more important is that finally hopefully people will start to move away from thinking about individual customer transactions and towards thinking about relationships – because it is relationships that are the key asset for organisations that have survived the recession well."